SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
October 14, 1998 (October 1, 1998)
------------------------------------------------
Date of Report (Date of Earliest Event Reported)
ZIONS BANCORPORATION
------------------------------------------------------
(Exact Name of Registrant As Specified In Its Charter)
UTAH
------------------------------------------------
(State or Other Jurisdiction of Incorporation)
0-2610 87-0227400
------------------------ ---------------------------------
(Commission File Number) (IRS Employer Identification No.)
One South Main, Suite 1380
Salt Lake City, Utah 84111
--------------------------------------------------
(Address of Principal Executive Offices)(Zip Code)
(801) 524-4787
----------------------------------------------------
(Registrant's Telephone Number, including Area Code)
-------------------------------------------------------------
(Former Name or Former Address, If Changed Since Last Report)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On October 1, 1998, Zions Bancorporation acquired all of the
outstanding common stock of The Sumitomo Bank of California, a California state
chartered bank ("Sumitomo-California"), through the merger of an indirect
wholly-owned subsidiary, SBC Acquisition Corp., with and into
Sumitomo-California with Sumitomo-California surviving. The merger was
consummated pursuant to the terms of an Agreement and Plan of Merger, dated
March 25, 1998, by and among Zions, SBC and Sumitomo-California (the "Merger
Agreement").
Zions acquired the shares of Sumitomo-California common stock for
$32.36 in cash per share for the shares held by The Sumitomo Bank, Limited and
$38.25 in cash per share for the publicly held shares for an aggregate purchase
price of approximately $546 million. The transaction was financed through a
variety of sources, including the following: (i) reduction of money market
investment balances (approximately $399 million), (ii) issuance of Zions common
stock (approximately $130 million), (iii) proceeds from the sale of subordinated
notes (approximately $110 million) and (iv) proceeds from the sale of a minority
interest in Sumitomo-California to Robert Sarver, a director of Zions and the
chairman of the board of Grossmont Bank, a wholly-owned California state banking
subsidiary of Zions, and CBT Holdings, a Wyoming general partnership controlled
by Mr. Sarver (approximately $33 million in the aggregate).
The sale of the minority interest was accomplished pursuant to a
Shareholder Agreement, dated October 1, 1998, between Zions, The Robert G.
Sarver Separate Property Trust dated September 29, 1997 and CBT Holdings. In
exchange for $16.5 million from each of the trust and CBT Holdings ($33 million
in the aggregate), Sumitomo-California issued to each of them new shares of
common stock representing a 5.4% interest in Sumitomo-California (10.8% in the
aggregate). The trust's investment was partially financed by a $14.85 million
loan from Zions pursuant to a Loan Agreement, dated October 1, 1998, between
Zions and the trust and evidenced by a Promissory Note for such amount.
Also on October l, 1998, Grossmont and Mr. Sarver entered into an
Employment Agreement pursuant to which Mr. Sarver would be employed as President
and Chief Executive Officer of Grossmont, which would be the surviving entity
after the merger of Sumitomo-California with and into Grossmont. Immediately
thereafter, Sumitomo-California merged with Grossmont. The shares of
Sumitomo-California held by the trust and CBT Holdings were exchanged for shares
representing a 2.5% interest in Grossmont (an aggregate 5% interest) in
connection with the merger. Grossmont then changed its name to California Bank &
Trust.
Also on October 1, 1998, Sumitomo-California and Zions issued a Joint
Press Release announcing both merger transactions.
The Merger Agreement, Shareholder Agreement, Loan Agreement, Promissory
Note, Employment Agreement and Joint Press Release appear as exhibits either to
this report or
2
<PAGE>
to prior Current Reports on Form 8-K and are incorporated herein by reference.
The foregoing summary is qualified in its entirety by reference to such
documents.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Audited balance sheets for the years ended December 31, 1997 and
1996 and audited statements of income, changes in shareholders' equity and cash
flows for the years ended December 31, 1997, 1996 and 1995 of
Sumitomo-California were filed as an exhibit to the Current Report on Form 8-K
filed on April 15, 1998 and are incorporated herein by reference. Interim
financial statements will be filed as an amendment to this Current Report on
Form 8-K within sixty days from the date of this report.
(b) Unaudited summary pro forma condensed balance sheet and income
statement information for the Sumitomo-California and SBC Acquisition Corp.
merger as of December 31, 1997 was filed as an exhibit to the Current Report on
Form 8-K filed on April 15, 1998 and is incorporated herein by reference.
Interim summary pro forma financial information will be filed as an amendment to
this Current Report on Form 8-K within sixty days from the date of this report.
(c) Exhibits
The following exhibits are filed with this Current Report on Form
8-K or incorporated by reference:
Exhibit
Number Description
- ------ -----------
2.1 Agreement and Plan of Merger, dated as of March 25, 1998, by and
among Zions Bancorporation, SBC Acquisition Corp. and The Sumitomo
Bank of California (incorporated by reference to Exhibit 2 to
Current Report on Form 8-K filed by Zions Bancorporation on
April 3, 1998).
10.1 Shareholder Agreement, dated October 1, 1998, among Zions
Bancorporation, The Robert G. Sarver Separate Property Trust dated
September 29, 1997 and CBT Holdings (attached).
10.2 Loan Agreement, dated October 1, 1998, between Zions
Bancorporation and The Robert G. Sarver Separate Property Trust
dated September 29, 1997 (attached).
10.3 Employment Agreement, dated October 1, 1998, between Grossmont
Bank and Robert Sarver (attached).
10.4 Promissory Note, dated October 1, 1998, by The Robert G. Sarver
Separate Property Trust dated September 29, 1997 in favor of Zions
Bancorporation (attached).
3
<PAGE>
99.1 Press Release, dated October 1, 1998, issued by Zions
Bancorporation and The Sumitomo Bank of California (attached).
99.2 Audited balance sheets for the years ended December 31, 1997 and
1996 and audited statements of income, changes in shareholders'
equity and cash flows for the years ended December 31, 1997, 1996
and 1995 of The Sumitomo Bank of California (incorporated by
reference to Exhibit 99.1 to Current Report on Form 8-K filed by
Zions Bancorporation on April 15, 1998).
99.3 Unaudited summary pro forma condensed balance sheet and income
statement information for The Sumitomo Bank of California and SBC
Acquisition Corp. merger as of December 31, 1997 (incorporated by
reference to Exhibit 99.2 to the Current Report on Form 8-K filed
by Zions Bancorporation on April 15, 1998).
4
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunder duly authorized.
Dated: October 14, 1998
ZIONS BANCORPORATION
By: /s/ Dale M. Gibbons
-----------------------------------
Name: Dale M. Gibbons
Title: Executive Vice President and
Chief Financial Officer
5
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
2.1 Agreement and Plan of Merger, dated as of March 25, 1998, by and
among Zions Bancorporation, SBC Acquisition Corp. and The Sumitomo
Bank of California (incorporated by reference to Exhibit 2 to
Current Report on Form 8-K filed by Zions Bancorporation on April
3, 1998).
10.1 Shareholder Agreement, dated October 1, 1998, among Zions
Bancorporation, The Robert G. Sarver Separate Property Trust dated
September 29, 1997 and CBT Holdings (attached).
10.2 Loan Agreement, dated October 1, 1998, between Zions
Bancorporation and The Robert G. Sarver Separate Property Trust
dated September 29, 1997 (attached).
10.3 Employment Agreement, dated October 1, 1998, between Grossmont
Bank and Robert Sarver (attached).
10.4 Promissory Note, dated October 1, 1998, by The Robert G. Sarver
Separate Property Trust dated September 29, 1997 in favor of Zions
Bancorporation (attached).
99.1 Press Release, dated October 1, 1998, issued by Zions
Bancorporation and The Sumitomo Bank of California (attached).
99.2 Audited balance sheets for the years ended December 31, 1997 and
1996 and audited statements of income, changes in shareholders'
equity and cash flows for the years ended December 31, 1997, 1996
and 1995 of The Sumitomo Bank of California (incorporated by
reference to Exhibit 99.1 to Current Report on Form 8-K filed by
Zions Bancorporation on April 15, 1998).
99.3 Unaudited summary pro forma condensed balance sheet and income
statement information for The Sumitomo Bank of California and SBC
Acquisition Corp. merger as of December 31, 1997 (incorporated by
reference to Exhibit 99.2 to the Current Report on Form 8-K filed
by Zions Bancorporation on April 15, 1998).
6
SHAREHOLDER AGREEMENT
This Shareholder Agreement ("the Agreement") is entered into as of
October 1, 1998, among Zions Bancorporation, a Utah corporation ("Zions"),
Robert G. Sarver, a director of Zions and Chairman of the Board of Directors
(the "Board") of Grossmont Bank (the "Bank"), a wholly owned subsidiary of
Zions, in his capacity as Trustee of the Robert G. Sarver Separate Property
Trust dated September 29, 1997 ("Sarver"), and CBT Holdings, a Wyoming general
partnership (the "Partnership" and together with Sarver, the "Investors"), which
consists of two Delaware limited liability companies as partners (collectively,
the "Limited Liability Companies" and for both of which Sarver, in his
individual capacity, is the sole manager).
RECITALS
A. Zions has entered into an Agreement and Plan of Merger dated as of
March 25, 1998 (the "Merger Agreement") providing for the acquisition of The
Sumitomo Bank of California ("Sumitomo").
B. The Merger Agreement provides for SBC Acquisition Corp., a wholly
owned subsidiary of the Bank, to be merged (the "First Merger") into Sumitomo,
with Sumitomo as the surviving bank (the "Interim Bank").
C. Immediately after the First Merger, the Interim Bank will declare
and pay a cash dividend of $250 million to the Bank, which will declare and pay
a comparable dividend to Zions (collectively, the "Dividends").
<PAGE>
D. Immediately following payment of the Dividends, but prior to the
merger of the Interim Bank into the Bank, Zions will cause the Interim Bank to
issue and sell to each of the Investors, and each of the Investors shall
purchase, shares of the common stock of the Interim Bank equal to 5.4% of the
outstanding shares of common stock of the Interim Bank.
E. Immediately after such investment by the Investors, the Interim Bank
shall merge with and into the Bank (the "Second Merger"), with the Bank as the
survivor, and each of the Investors will, as a consequence of the Second Merger,
own 2.5% of the issued and outstanding common stock (the "Bank Common Stock") of
the Bank.
F. The parties hereto wish to provide for the investment by the
Investors in the Bank and for various aspects of their relationship as
shareholders of the Bank.
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which is hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. As used in this Agreement, the following terms shall
have the following meanings:
- 2 -
<PAGE>
"AVERAGE PRICE" means the average of the closing prices of Zions Common
Stock, as reported on Nasdaq (as reported in The Wall Street Journal or, if not
reported therein, in another authoritative source), for the (i) ten Nasdaq
trading days immediately preceding a Buy-Back Notice and (ii) the ten Nasdaq
trading days immediately following such Buy-Back Notice.
"BANK" means Grossmont Bank.
"BANK COMMON STOCK" has the meaning specified in Recital E.
"BHC ACT" means the Bank Holding Company Act of 1956, as amended.
"BUY-BACK CLOSING" has the meaning specified in Section 10.6(b) hereof.
"BUY-BACK NOTICE" has the meaning specified in Section 10.6(a) hereof.
"BUY-BACK PRICE" has the meaning specified in Section 10.6(e) hereof.
"BUY-BACK SECURITIES" has the meaning specified in Section 10.6(a)
hereof.
"COMMISSIONER" means the California Commissioner of Financial
Institutions.
"DRAWDOWN DATE" has the meaning specified in Section 9.6 hereof.
"EMPLOYMENT AGREEMENT" has the meaning specified in Section 5.6 hereof.
"EXCHANGE ACT" means the U.S. Securities Exchange Act of 1934, as
amended.
"FDIA" means the Federal Deposit Insurance Act, as amended.
- 3 -
<PAGE>
"GAAP" means generally accepted United States accounting principles.
"INDEPENDENT" when used with respect to an Investment Bank means an
Investment Bank which has not been engaged by Zions for a fee in excess of
$25,000 during the 12-month period preceding the date of its engagement
hereunder.
"INVESTMENT BANK" means a nationally recognized investment banking firm
with experience in evaluating or valuing banking organizations, including
California banking organizations.
"INVESTOR DISCLOSURE LETTER" means the letter from the Investors to
Zions delivered on or before the date hereof with respect to certain
representations and warranties.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
business, results of operations or financial condition of Zions and its
subsidiaries, taken as a whole, other than any such effect attributable to or
resulting from (x) any change in banking or similar laws, rules or regulations
of general applicability or interpretations thereof by courts or governmental
authorities or (y) any change in GAAP or regulatory accounting principles
applicable to banks or their holding companies or (ii) the ability of Zions to
perform its obligations pursuant to this Agreement.
"NASDAQ" means the Nasdaq Stock Market or other primary market on which
Zions Common Stock is listed.
"OFFICER'S CERTIFICATE" means a certificate signed by the chief
executive officer or the chief financial officer of Zions, stating that (i) the
person signing such
- 4 -
<PAGE>
certificate has made or has caused to be made such investigations as are
necessary in order to permit him to verify the accuracy of the information set
forth in such certificate, and (ii) to the best of such person's knowledge, such
certificate does not misstate any material fact or omit to state any material
fact necessary to make the certificate not misleading.
"PROPORTIONATE SHARE" means, with respect to each of the Shareholders,
a fraction, the numerator of which is the total number of shares of Bank Common
Stock owned by such Shareholder and the denominator of which is the total number
of shares of outstanding Bank Common Stock at such time.
"RIGHTS" means securities or obligations convertible into or
exercisable or exchangeable for, or giving any person any right to subscribe for
or acquire, or any options, calls or commitments relating to, or any stock
appreciation right or other instrument the value of which is determined in whole
or in part by reference to the market price or value of, shares of Bank Common
Stock or other equity securities.
"SECURITIES ACT" means the U.S. Securities Act of 1933, as amended.
"SHAREHOLDERS" means Zions and each of the Investors.
"TRANSFER" has the meaning set forth in Section 10.1.
"ZIONS COMMON STOCK" means the common stock, no par value, of Zions
together with any rights attached thereto pursuant to the Shareholder Protection
Rights Agreement dated September 27, 1996, between Zions and Zions First
National Bank, as rights agent.
- 5 -
<PAGE>
"ZIONS DISCLOSURE LETTER" means the letter from Zions to the Investors
delivered on or before the date hereof with respect to certain representations
and warranties.
1.2 DEFINITIONS IN MERGER AGREEMENT. Except as otherwise provided
herein, terms defined in the Merger Agreement shall have their same respective
meanings herein.
ARTICLE II
INVESTMENT
2.1 INVESTMENT. Immediately following payment of the Dividends, subject
to the terms and conditions of Articles V and VI hereof, Zions shall cause the
Interim Bank to issue and sell to each of the Investors, and each of the
Investors, severally and not jointly, shall purchase from the Interim Bank, a
number of shares (the "Shares") of the common stock of the Interim Bank,
representing 5.4% of the outstanding shares of common stock of the Interim Bank.
The purchase price for each of the Investors shall be $16,500,000 (the "Purchase
Price"), for an aggregate purchase price of $33,000,000. The Purchase Price
shall increase or decrease in the same percentage as the aggregate consideration
payable by Zions pursuant to the Merger Agreement shall, if at all, increase or
decrease prior to the consummation of the First Merger.
2.2 LOAN TO SARVER. At the Closing, Zions shall extend a loan to Sarver
in the amount of $14,850,000 (the "Sarver Loan") to apply to the Purchase Price,
upon the terms and conditions set forth in a Loan Agreement between Sarver and
Zions and in
- 6 -
<PAGE>
a Non-Recourse Promissory Note, both in the form attached as Exhibit A to this
Agreement.
2.3 THE CLOSING. The delivery of the respective Shares to the
Investors, and the payment by each of the Investors of its Purchase Price, will
take place at the offices of Sullivan & Cromwell in Los Angeles, California at a
closing (the "Closing") immediately following payment of the Dividends and prior
to the Second Merger. Payment of the Purchase Price shall be by transfer of
immediately available funds to an account designated by Zions.
2.4 MERGER WITH THE BANK. Immediately following the payment of its
Purchase Price by each of the Investors, the Interim Bank shall merge with and
into the Bank, with the Bank being the surviving entity. The outstanding shares
of the Interim Bank shall be canceled. The Bank shall issue to the Investors
newly issued shares of Bank Common Stock equal, in the aggregate, to 5% of the
Bank's issued and outstanding shares of Bank Common Stock, of which each of the
Investors shall own half.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ZIONS
Zions hereby represents and warrants to the Investors that:
3.1 ORGANIZATION, ETC. Each of Zions, the Interim Bank and the Bank
has, or will have following the First Merger, all requisite power and authority
to enter into, carry out and perform its obligations under the terms of this
Agreement.
- 7 -
<PAGE>
3.2 CAPITALIZATION.
(a) Immediately after the First Merger, (i) the authorized capital
stock of the Interim Bank will consist of 25,000,000 shares of common stock and
5,000,000 shares of preferred stock and (ii) there will be (x) such number of
shares of such common stock outstanding as shall be certified at the Closing by
Zions to the Investors, all of which will be owned by the Bank, free and clear
of all liens, encumbrances, equities or claims, and (y) no shares of such
preferred stock outstanding.
(b) The authorized capital stock of the Bank consists of 3,000,000
shares of Bank Common Stock. As of the date hereof there are, and immediately
prior to the Second Merger there will be, 1,900,000 shares of Bank Common Stock
outstanding, all of which are and will be owned by Zions.
(c) The authorized capital stock of Zions consists of 200,000,000
shares of Zions Common Stock and 3,000,000 shares of Zions preferred stock.
(d) Neither the Interim Bank nor the Bank has any outstanding Rights,
or any other equity securities outstanding except as set forth in this Section
3.2.
(e) All of the outstanding shares of the capital stock of each of the
Interim Bank and the Bank are, or will at the Closing be, validly issued, fully
paid and nonassessable and, upon the issuance and sale of the Shares and of the
Bank Common Stock to be acquired by the Investors, the Shares and such Bank
Common Stock will be validly issued, fully paid and nonassessable.
- 8 -
<PAGE>
3.3 AUTHORIZATION; NO BREACH. The execution, delivery and performance
of this Agreement and the consummation of all transactions contemplated hereby
have been duly authorized by all requisite corporate action of Zions. Assuming
due execution by each of the Investors, this Agreement constitutes a valid and
binding obligation of Zions, enforceable in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general principles of equity. The execution, delivery and performance by
Zions of this Agreement do not and will not (with or without the giving of
notice, the lapse of time or both) result in the creation of any lien, claim,
security interest, charge or other encumbrance upon Zions', the Interim Bank's
or the Bank's capital stock or assets or (i) conflict with or result in a breach
of the terms, conditions or provisions of, (ii) constitute a default under,
(iii) give any third party the right to accelerate any obligation under or (iv)
result in a violation of, the Articles of Incorporation or Bylaws of Zions, the
Interim Bank or the Bank, or, any law, statute, rule, regulation, instrument,
order, judgment or decree to which Zions, the Interim Bank or the Bank or any of
their respective properties is subject, or any contract, instrument or document
to which either Zions, the Interim Bank or the Bank is a party or by which it is
bound or to which any of its respective properties is subject, assuming that the
Commissioner shall have either approved the investment by the Investors in the
Shares or exempted such investment from the applicable requirements of the
California Financial
- 9 -
<PAGE>
Code and issued a permit or exempted from the permit requirements the issuance
and sale to the Investors of the Shares and the Bank Common Stock.
3.4 REGULATORY MATTERS. No consent, approval, authorization,
registration or qualification of any Governmental Authority or any third party
is required to be obtained by Zions or any of its Subsidiaries in connection
with the execution, delivery or performance by Zions of the Agreement, except
such consents, approvals, authorizations, registrations or qualifications as may
be required under federal or state banking laws.
3.5 RIGHTS OF BANK COMMON STOCK. Each share of Bank Common Stock issued
and sold to the Investors hereunder will have the rights set forth in the Bank's
Articles of Incorporation, a copy of which is set forth as Exhibit B hereto.
3.6 OWNERSHIP OF SHARES AND BANK COMMON STOCK. Upon (a) delivery of the
Shares to the Investors and payment therefor pursuant hereto and (b) the
cancellation of such Shares in exchange for Bank Common Stock pursuant to the
Second Merger, good and valid title to such Shares and Bank Common Stock, free
and clear of all liens, encumbrances, equities or claims, will pass to the
Investors, except for a lien in favor of Zions with respect to the Shares and
the Bank Common Stock securing the Sarver Loan. Neither the issuance and sale of
the Shares pursuant hereto nor the cancellation of such Shares in exchange for
Bank Common Stock in connection with the Second Merger will give rise to any
preemptive rights or will violate any law, statute,
- 10 -
<PAGE>
rule, regulation, instrument, order, judgment or decree to which either the
Interim Bank or the Bank or any of their respective assets are subject.
3.7 FINANCIAL REPORTS AND REGULATORY DOCUMENTS.
(a) Zions' Annual Report on Form 10-K for the fiscal year ended
December 31, 1997, and all other reports, registration statements, definitive
proxy statements or information statements filed or to be filed by it or any of
its Subsidiaries subsequent to December 31, 1997 under the Securities Act or
under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, in the form filed
or to be filed (collectively, "SEC Documents") with the SEC, as applicable, as
of the date filed, (i) complied or will comply in all material respects as to
form with the applicable requirements under the Securities Act and the Exchange
Act, as the case may be, and (ii) did not and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and each of the
consolidated balance sheets contained in or incorporated by reference into any
such SEC Document (including the related notes and schedules thereto) fairly
presents, or will fairly present, the consolidated financial position of Zions
and its Subsidiaries as of its date, and each of the consolidated statements of
income and changes in stockholders' equity and cash flows or equivalent
statements in such SEC Documents (including any related notes and schedules
thereto) fairly presents, or will fairly present, the consolidated results of
operations, changes in stockholders' equity and changes in cash flows, as the
case may be, of Zions and its
- 11 -
<PAGE>
Subsidiaries for the periods to which they relate, in each case in accordance
with GAAP consistently applied during the periods involved, except in each case
as may be noted therein, subject to normal year-end audit adjustments and the
lack of complete footnote disclosure in the case of unaudited statements.
(b) Except as disclosed in the SEC Documents filed on or before the
date hereof or in the Zions Disclosure Letter, since March 31, 1998, (i) Zions
and its Subsidiaries have conducted their respective businesses in the ordinary
and usual course consistent with past practice and (ii) no event has occurred or
circumstance arisen that, individually or taken together with all other facts,
circumstances and events, has had or is reasonably likely to have a Material
Adverse Effect.
3.8 LITIGATION. There are no actions, suits, claims, arbitrations,
proceedings or investigations pending, or, to the knowledge of Zions, threatened
against, affecting or involving Zions or any of its Subsidiaries in connection
with the transactions contemplated by the First Merger, the Second Merger, or
this Agreement, at law or in equity or before or by any court, arbitrator or
governmental authority, domestic or foreign.
3.9 SUMITOMO REPRESENTATIONS. Except as set forth in the Zions
Disclosure Letter, Zions is not aware that any of the representations made by
Sumitomo in the Merger Agreement are untrue as of the date hereof.
- 12 -
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE INVESTORS
Each of the Investors hereby represents and warrants to Zions that:
4.1 EXECUTION, DELIVERY AND PERFORMANCE. Such Investor has full power
and authority to execute and deliver this Agreement and to perform his or its
obligations hereunder. This Agreement has been duly authorized, executed and
delivered by such Investor and is his or its valid and binding obligation,
enforceable against him or it, as the case may be, in accordance with its terms
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general principles of equity. No consent, approval,
authorization, order, filing, registration or qualification of or with any
court, governmental authority or third person is required to be obtained by such
Investor in connection with the execution and delivery of this Agreement or the
performance of its obligations hereunder or thereunder, except such consents,
approvals, authorizations, registrations or qualifications as may be required
under federal or state banking laws.
4.2 INVESTMENT. Such Investor is acquiring the Shares for investment
and not with a view to their distribution. One of the partners of the
Partnership is an "accredited investor" as that term is defined in Rule 501(a)
under the Securities Act. The other partner of the Partnership has no more than
35 members who are not accredited investors, each of whom is an officer of the
Bank and has such knowledge and experience in financial and business matters
that he or she is capable of evaluating the merits and
- 13 -
<PAGE>
risks of the prospective investment. The Partnership agrees that it has
provided, or will provide prior to Closing, all information required pursuant to
Rule 502(b) under the Securities Act to each of its partners and the members of
such partners.
4.3 ORGANIZATION. The Partnership is duly formed, validly existing and
in good standing under the laws of the state of its formation.
4.4 NO BREACH. The execution and delivery by such Investor of this
Agreement and the consummation of the transactions contemplated hereby do not
and will not (with or without the giving of notice, the lapse of time or both)
(i) conflict with or result in a breach of the terms, conditions or provisions
of, (ii) constitute a default under, (iii) except for a lien in favor of Zions
with respect to the Shares securing the Sarver Loan, result in the creation of
any lien, security interest, charge or encumbrance upon such Investor's equity
interests or assets, (iv) give any third party the right to accelerate any
obligation under, or (v) result in a violation of, the Partnership's partnership
agreement or any law, statute, rule, regulation, instrument, order, judgment or
decree to which such Investor or any of its properties is subject, or any
contract to which it is a party or by which it is bound or to which any of its
properties is subject, assuming that the Commissioner shall have either approved
the investment by the Investors or exempted it from the applicable requirements
of the California Financial Code.
4.5 FINANCING. Provided that Zions extends the Sarver Loan at the
Closing, each such Investor has, or will have at the Closing, funds available to
it to consummate the purchase of the Shares pursuant to the terms of this
Agreement. Except
- 14 -
<PAGE>
for the Sarver Loan, no part of the Purchase Price will be borrowed from Zions
or any of its affiliates.
4.6 LITIGATION. There are no actions, suits, claims, arbitrations,
proceedings or investigations pending, or, to the knowledge of either of the
Investors, threatened against, affecting or involving either of the Investors in
connection with the transactions contemplated by the First Merger, the Second
Merger, or this Agreement, at law or in equity or before or by any court,
arbitrator or governmental authority, domestic or foreign.
4.7 PARTNERSHIP. The offering and sale of interests in the Partnership
and the Limited Liability Companies was (a) exempt from registration under the
Securities Act and (b) qualified or registered under, or exempt from, the
applicable requirements of state "Blue Sky" laws, including without limitation
the California Corporate Securities Law of 1968.
4.8 SUMITOMO REPRESENTATIONS. Except as set forth in the Investor
Disclosure Letter, such Investor is not aware that any of the representations
made by Sumitomo in the Merger Agreement are untrue as of the date hereof.
ARTICLE V
CONDITIONS TO THE INVESTORS' OBLIGATIONS FOR THE CLOSING
The obligation of each of the Investors to purchase and pay for the
Shares to be purchased by such Investor at the Closing is subject to the
satisfaction on or before the date of the Closing of the following conditions:
- 15 -
<PAGE>
5.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Zions contained in Article III hereof shall be true in all material respects
at and as of the Closing as though then made, except as expressly contemplated
thereby.
5.2 BANK REGULATORY ACTION. The Commissioner shall have either approved
the investment in, and issuance of, the Shares and the Bank Common Stock or
exempted the investment in the Shares and the issuance of the Shares and the
Bank Common Stock from the requirements of Sections 701 and 691, respectively of
the California Financial Code, and the Commissioner and the FDIC, as the case
may be, shall have approved the First Merger and the Second Merger.
5.3 PROCEEDINGS. All corporate and other proceedings taken or required
to be taken by Zions, the Bank or the Interim Bank in connection with the
transactions contemplated hereby to be consummated at or prior to the Closing
shall have been taken and all documents incident thereto shall be satisfactory
in form and substance to the Investors.
5.4 CLOSING CERTIFICATE. Zions shall have delivered to the Investors on
the date of such Closing an Officer's Certificate dated the date of such
Closing, stating that the conditions set forth in Sections 5.1 and 5.3 have been
satisfied.
5.5 EXTENSION OF SARVER LOAN. Zions shall have extended the Sarver Loan
on the date of Closing.
- 16 -
<PAGE>
5.6 EMPLOYMENT AGREEMENT. The Bank and Sarver shall have entered into
the Employment Agreement substantially in the form attached hereto as Exhibit C
(the "Employment Agreement").
5.7 FIRST MERGER. The First Merger shall have been consummated
immediately prior to the acquisition of the Shares by the Investors.
5.8 NO GOVERNMENTAL ACTION. No action or proceeding by or before any
governmental authority shall have been instituted or threatened (and not
subsequently dismissed, settled or otherwise terminated) which is reasonably
expected to (i) restrain, prohibit or invalidate the transactions contemplated
by the First Merger, the Second Merger or this Agreement, or (ii) have a
Material Adverse Effect on Zions or the Bank, either prior to or after the First
Merger or the Second Merger.
5.9 LEGAL OPINION. Zions shall have furnished a legal opinion as to the
due authorization, full payment and non-assessability of the Shares and the Bank
Common Stock.
5.10 WAIVER. Any condition specified in this Article V may be waived in
writing by the Investors.
ARTICLE VI
CONDITIONS TO ZIONS' OBLIGATIONS FOR THE CLOSING
The obligation of Zions to cause the Interim Bank to deliver the Shares
to the Investors at the Closing is subject to the satisfaction on or before the
date of the Closing of the following conditions:
- 17 -
<PAGE>
6.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Investors contained in Article IV hereof shall be true and correct in all
material respects at and as of the date of the Closing as if made on and as of
such date and Zions shall have received a certificate from each of the Investors
to such effect.
6.2 BANK REGULATORY ACTION. The Commissioner shall have either approved
the investment in, and issuance of, the Shares and the Bank Common Stock or
exempted the investment in the Shares and the issuance of the Shares and the
Bank Common Stock from the requirements of Sections 701 and 691, respectively of
the California Financial Code and the Commissioner and the FDIC, as the case may
be, shall have approved the First Merger, the Second Merger and the payment of
the Dividends.
6.3 PROCEEDINGS. All partnership and other proceedings taken or
required to be taken by the Investors in connection with the transactions
contemplated hereby to be consummated at or prior to the Closing shall have been
taken and all documents incident thereto shall be satisfactory in form and
substance to Zions.
6.4 CLOSING DOCUMENTS. The Partnership shall have delivered to Zions on
the date of such Closing a copy of the partnership agreement of the Partnership
and the certificates of formation of the Limited Liability Companies, certified
by Sarver.
6.5 EMPLOYMENT AGREEMENT. Sarver shall have entered into the Employment
Agreement.
6.6 NO GOVERNMENTAL ACTION. No action or proceeding by or before any
governmental authority shall have been instituted or threatened (and not
subsequently
- 18 -
<PAGE>
dismissed, settled or otherwise terminated) which is reasonably expected to (i)
restrain, prohibit or invalidate the transactions contemplated by the First
Merger, the Second Merger or this Agreement, or (ii) have a Material Adverse
Effect on Zions or the Bank, either prior to or after the First Merger or the
Second Merger.
6.7 WAIVER. Any condition specified in this Article VI may be waived in
writing by Zions.
ARTICLE VII
COVENANTS
7.1 FILINGS. If and when necessary, as promptly as practicable, Zions
and the Investors shall make, and Zions shall cause the Bank and the Interim
Bank to make, all filings and submissions under applicable banking laws and
regulations as may be reasonably required to be made in connection with this
Agreement and the transactions contemplated hereby. Zions shall furnish to the
Investors, and the Investors shall furnish to Zions, such information and
assistance as the other may reasonably request in connection with the
preparation of any such filings or submissions.
7.2 CONDITIONS TO CLOSING. Zions and the Investors shall each use their
reasonable best efforts to cause (a) the conditions to the Closing, as described
herein in Articles V and VI, to be satisfied, including, in the case of Zions to
cause each of the Bank and the Interim Bank to take the actions contemplated
hereby, and (b) the Closing to occur promptly after satisfaction of the
conditions thereto.
- 19 -
<PAGE>
7.3 RESTRICTIONS ON OTHER AGREEMENTS. Except as otherwise provided
herein, none of the Shareholders shall grant any proxy or enter into, or agree
to be bound by, any voting trust or voting agreement with respect to the Bank
Common Stock nor shall any of the Shareholders enter into any agreement,
contract or arrangement with any Person with respect to any shares of Bank
Common Stock that would adversely affect its ability to perform its obligations
under this Agreement in any material respect.
7.4 INDEMNITY PAYMENTS. Zions agrees that, so long as the Investors own
any Bank Common Stock, it shall contribute any payments received by it pursuant
to the Indemnification Agreement, dated as of March 25, 1998, between The
Sumitomo Bank, Limited and Zions, to the Bank.
7.5 RIGHT TO RELY ON SARVER. Unless and until the chief executive
officer or the chief financial officer of Zions has received notice to the
contrary from an individual purporting to be the successor manager of the
Limited Liability Companies, together with evidence reasonably acceptable to
Zions to establish such succession, Zions shall be entitled to assume that
Sarver is the manager of the Limited Liability Companies. Each and every action
taken or omitted hereunder in reliance on such assumption shall be final and
binding on the Partnership, notwithstanding that it may later be shown that
Sarver was not, at the time of such action or omission, the manager of the
Limited Liability Companies.
- 20 -
<PAGE>
ARTICLE VIII
BANK GOVERNANCE
8.1 THE BOARD OF DIRECTORS. The business and affairs of the Bank shall
be managed under the direction of the Board of Directors of the Bank (the
"Board"). So long as the Investors own, in the aggregate, not less than 3% of
the Bank Common Stock, the Board shall consist of not more than 20 members.
Zions shall vote its shares of the Bank Common Stock to ensure that at least one
representative of the Investors, to be named by Sarver, is at all times a member
of the Board. Sarver, in his individual capacity, shall be the initial
representative of the Investors to serve as a member of the Board.
8.2 CHIEF EXECUTIVE OFFICER. Pursuant to the Employment Agreement, from
and after the Effective Time Sarver has agreed to serve, and the Bank has agreed
to employ Sarver, as the chief executive officer of the Bank, subject to the
terms and conditions set forth in such agreement. If for any reason Sarver
should cease to serve in such capacity, Zions will cause the Board to consider
(but not be bound by) the views of the Investors prior to naming a successor.
8.3 BUY-BACK OPTION. In the event that Sarver should cease to serve as
chief executive officer of the Bank for any reason, the Investors shall be
entitled (but not obligated) to exercise rights under Section 10.6 to require
Zions to purchase all (but not less than all) of the Bank Common Stock
beneficially owned by the Investors by giving Zions an irrevocable Buy-Back
Notice anytime within 90 days of the date that Sarver ceases to serve as chief
executive officer of the Bank. The acquisition by Zions of the
- 21 -
<PAGE>
Investors' shares of Bank Common Stock shall be made in accordance with all of
the terms of Section 10.6.
ARTICLE IX
BANK OPERATIONS
9.1 FINANCIAL INFORMATION. In addition to such internal audits and
credit examinations as may be undertaken by Zions' personnel, for each fiscal
year commencing with the fiscal year ending December 31, 1998 to and including
the fiscal year ending December 31, 2002, Zions shall cause its independent
accountants to perform an annual audit of the financial statements of the Bank.
Subject to any bank regulatory accounting requirements, such financial
statements shall be prepared in accordance with GAAP applied on a consistent
basis. The cost of the internal and external audits and the credit examinations
shall be borne by the Bank. Taxes in respect of income shall be computed by the
Bank as if it were a separate entity, in accordance with a tax sharing agreement
conforming to Zions' practices with its other banking Subsidiaries.
9.2 OVERHEAD ALLOCATIONS. In accordance with its practices consistently
applied with respect to its banking Subsidiaries, Zions shall allocate to the
Bank the latter's share of Zions' general and administrative expenses. In the
event of any dispute as to the reasonableness of such allocations taken as a
whole, the Shareholders agree that such dispute shall be referred to KPMG Peat
Marwick LLP, the independent auditors of Zions, or if KPMG Peat Marwick LLP
declines to serve then to another independent accounting firm mutually agreed by
the Shareholders, which firm's decision
- 22 -
<PAGE>
on the matter (including any proposed modifications to make such allocations
reasonable taken as a whole) shall be final and binding (and in the case of any
proposed modifications, shall be implemented by Zions). The sole issue shall be
whether such allocations are unreasonable taken as a whole, including without
limitation the consideration of Zions' general and administrative expenses which
are not so allocated. The expenses of the referee shall be paid by Zions if the
referee determines that the allocations are, taken as a whole, unreasonable;
otherwise, such expenses shall be paid by the Investors.
9.3 BANK POLICIES. Each of the Investors (a) acknowledges that the
Bank's practices and policies as of the date hereof with respect to accounting,
credit (including provisioning for credit losses and the adequacy of the
allowance for such losses), risk management (including liquidity, interest rate
risk and capital management), internal controls and similar matters may not
necessarily conform to the practices and policies applicable to Zions' other
banking Subsidiaries generally and (b) agrees that Zions has the right in its
sole discretion to cause the Bank to modify existing practices and policies of
the Bank or to require the Bank to implement new practices and policies which
Zions deems to be prudent or otherwise warranted under the circumstances and in
accordance with safe and sound banking practices.
9.4 BENEFIT PLANS. The Bank's employee benefit plans shall be generally
consistent with the benefit plans of Zions and its other banking Subsidiaries.
Without limiting the generality of the foregoing, the Bank shall not issue any
Rights.
- 23 -
<PAGE>
9.5 RESTRICTIONS ON CAPITAL DISTRIBUTIONS. The Bank shall not make any
capital distribution, as defined in Section 38(b)(2)(B) of the FDIA, which
would, after giving effect to such capital distribution, cause (a) the Bank to
be less than "well-capitalized" as such term is defined in Part 325 of the
regulations of the FDIC, or (b) during the 18-month period following the
Effective Date, the Bank's tangible common equity to be less than $250,000,000.
9.6 ADDITIONAL BANK COMMON STOCK. At any time (other than in connection
with an acquisition by, or merger of, the Bank) shares of Bank Common Stock are
to be issued by the Bank, the Shareholders shall be entitled to acquire
additional shares of Bank Common Stock during the term of this Agreement, such
acquisitions to be made in such amounts and on such dates (each, a "Drawdown
Date") as shall be specified by the Board in notices delivered to the
Shareholders, provided that (i) in connection with each such issuance of Bank
Common Stock each Shareholder shall be permitted to acquire additional shares of
the Bank Common Stock being issued in proportion to their respective
Proportionate Shares, (ii) each Drawdown Date shall be at least 30 business days
after delivery of the applicable notice of the issuance from the Board and (iii)
no Shareholder shall be permitted to acquire additional shares of Bank Common
Stock unless it commits thereto at least three business days prior to the
Drawdown Date. All acquisitions pursuant to this Section 9.6 shall be made in
cash in United States dollars by wire transfer to a bank account of the Bank
specified to the Shareholders in the notice of the issuance from the Board.
Notwithstanding the
- 24 -
<PAGE>
foregoing, if on any Drawdown Date (a) one Investor does not acquire its full
Proportionate Share of additional shares of Bank Common Stock, the other
Investor may acquire such additional shares and (b), subject to clause (a), the
Investors do not acquire their full Proportionate Share of additional shares of
Bank Common Stock, Zions may acquire such additional shares. The price of any
additional Bank Common Stock issued pursuant to this Section 9.6 shall be
determined by the Board pursuant to Section 409 of the California General
Corporation Law after it obtains the advice of an Independent Investment Bank,
which shall provide to the Board its written calculation of such price in
accordance with customary criteria.
9.7 CALIFORNIA ACTIVITIES. Except as set forth in Section 9.8 and in
the proviso to this Section 9.7, Zions agrees that until the earlier of (a)
April 1, 2003 and (b) the date the Investors no longer own any shares of Bank
Common Stock, it will not (i) own another insured depository institution (as
such term in defined in the FDIA) with its principal office in California, (ii)
permit any of its insured depository institution Subsidiaries other than the
Bank to maintain branches in California or (iii) engage in any manner either
from within or outside California in any banking business in California;
provided that, Zions may, directly or indirectly, engage in (A) normal marketing
and related banking activities associated with branches located in communities
in a state adjacent to California and within 50 miles from the California border
provided that such activities are conducted only within the branch's normal
market area, (B) activities with customers located (i) outside California which
either move to or have operations in
- 25 -
<PAGE>
California or (ii) in California but open an unsolicited account at a branch
located outside California of an insured depository institution owned by Zions,
(C) activities set forth on Exhibit D hereto and (D) activities which whether as
a result of the purchase of an existing operation or the establishment of such
activities internally by Zions, provide products or services to customers in
California; provided in the case of this clause (D) that (x) such products and
services are offered to customers of Zions' other insured depository institution
Subsidiaries and (y) revenues and costs from such activities are equitably and
fully allocated to the Bank and such other Subsidiaries.
9.8 ACQUISITIONS. (a) Zions may acquire one or more other insured
depository institution with its principal office in California or may purchase
the assets and/or assume the liabilities of the California branches of another
insured depository institution, provided that within 90 days of the date of such
acquisition, any such other insured depository institution or such assets and/or
liabilities is combined with the Bank, by merger or otherwise. In addition, the
Bank may make acquisitions of assets and/or assumptions of liabilities of other
insured depository institutions or their branches. In any such case in which the
Bank is combined with another insured depository institution or makes such
acquisitions or assumes such liabilities, to the extent that the consideration
therefor is obtained from Zions, additional shares of Bank Common Stock shall be
issued to Zions (and the Proportionate Share of each of the Investors will be
reduced accordingly) in an amount equal to the amount of such consideration,
provided that the value of the Bank Common Stock so issued pursuant to this
clause (a) shall be
- 26 -
<PAGE>
determined by the Board pursuant to Section 409 of the California General
Corporation Law after it obtains the advice of (i) one Independent Investment
Bank mutually agreed to by Zions and the Investors or (ii) if Zions and the
Investors do not mutually agree, two Independent Investment Banks, one of which
shall be selected by Zions and one of which shall be selected by the Investors,
and each of which in the case of clause (i) and (ii) shall provide the Board its
written calculation of such price in accordance with customary criteria. The
value of the consideration given by Zions, if composed of Zions Common Stock,
shall be the Average Price (substituting, however, the date of the execution of
an agreement evidencing the acquisition for the date of the Buy-Back Notice).
(b) In the event that pursuant to Section 9.8(a), Zions proposes to the
Board that the Bank acquire or merge with an institution having more than 20% of
the Bank's assets reflected on the Bank's call report as of the fiscal quarter
immediately preceding such proposal, or acquire in one transaction assets with a
book value of more than 20% of the Bank's assets reflected on the Bank's call
report as of the fiscal quarter immediately preceding such proposal, and such
acquisition is not approved by Sarver, the Investors shall be entitled to
exercise rights under Section 10.6 by giving Zions an irrevocable Buy-Back
Notice, anytime within 90 days of the date that Zions or the Bank enters into an
agreement to make such an acquisition, to require Zions to purchase all (but not
less than all) of the shares of Bank Common Stock beneficially owned by the
Investors. The acquisition by Zions of the Investors' shares of Bank Common
Stock shall be made in accordance with all of the terms of Section 10.6.
- 27 -
<PAGE>
9.9 ASSET SALES. Zions agrees to consult with Sarver prior to the sale
by the Bank to Zions or any of its affiliates of any assets outside of the
ordinary course of business of the Bank.
ARTICLE X
TRANSFERS OF CAPITAL STOCK
10.1 PROHIBITION AGAINST TRANSFERS. (a) None of the Shareholders may
sell, assign, transfer, pledge or otherwise dispose of (collectively, a
"Transfer") any Bank Common Stock other than as provided in this Article X. Any
purported Transfer of Bank Common Stock in violation of this Article X shall be
null and void and of no effect whatsoever.
10.2 REGULATORY COMPLIANCE. Notwithstanding any other provision of this
Agreement, no Shareholder may Transfer any shares of Bank Common Stock otherwise
than in compliance with the Securities Act, the BHC Act, the Change in Bank
Control Act and all other applicable laws.
10.3 NOTIFICATION OF INTENT TO TRANSFER. In the event that a
Shareholder decides to Transfer its Bank Common Stock in a manner permitted
under this Article X and undertakes meaningful steps in furtherance of such
decision, such Shareholder shall give the other Shareholders prompt written
notice of such decision.
10.4 TRANSFER BY THE INVESTORS. Except (i) as provided in this
Agreement, (ii) for the pledge of Bank Common Stock securing the Sarver Loan and
(iii) for Sarver to transfer the Bank Common Stock owned by him (subject to such
- 28 -
<PAGE>
pledge) to an entity controlled by Sarver, neither of the Investors may Transfer
shares of Bank Common Stock beneficially owned by him or it without the prior
written consent of Zions, which consent will not be unreasonably withheld.
10.5 TRANSFER BY ZIONS. Except as provided hereunder in this Section
10.5, Zions may not Transfer shares of Bank Common Stock beneficially owned by
it unless (i) Zions is acquired in a merger or other business combination (in
which case this Agreement shall be expressly assumed by the surviving entity),
or (ii) the Investors, in their sole discretion, consent in writing prior to
such Transfer or (iii) Zions Transfers all (but not less than all) of its shares
of Bank Common Stock beneficially owned by it to a Person in a bona fide
transaction at arm's-length and simultaneously with such Transfer by Zions, and
as a condition of Zions' Transfer, the transferee of such shares of Bank Common
Stock shall offer to purchase from the Investors their shares of Bank Common
Stock in accordance with this Section 10.5 at the same price being received by
Zions and for the same type of consideration if the purchase price is paid
solely in cash, or, if the purchase price is made in whole or in part in
securities of the acquiring person, the Investors shall receive for each share
of Bank Common Stock the same consideration received by Zions for each of its
shares of Bank Common Stock provided that the receipt of any securities would be
a non-taxable event to the Investors. If the receipt of securities would be
taxable to the Investors, then the Investors shall be entitled to receive in
U.S. dollars a cash purchase price per share of Bank Common Stock equal to the
sum of any cash and the value of the securities to be received by Zions for each
share of Bank
- 29 -
<PAGE>
Common Stock as calculated in accordance with the agreement entered into with
the acquiring person and valued as of the date of the execution of the
agreement. As a condition to the closing of any Transfer pursuant to this
Section 10.5 (iii), an Investment Bank selected by the Investors with the
approval of Zions, which approval shall not be unreasonably withheld, shall
deliver, if requested by Sarver, a fairness opinion to the Board that the
consideration to be received for such Bank Common Stock in such Transfer is fair
to the Investors from a financial point of view. The Investors shall not be
entitled to any consideration pursuant to this Section 10.5 (iii) unless such
Transfer is consummated.
10.6 ZIONS BUY-BACK. (a) At any time after December 31, 2002 and prior
to March 31, 2003, the Investors may give to Zions written notice (the "Buy-Back
Notice"), which shall be irrevocable, of their intention to exercise their
rights under this Section 10.6 to require Zions to purchase all (but not less
than all) of the shares of Bank Common Stock beneficially owned by the Investors
(the "Buy-Back Securities") at the Buy-Back Price (as defined below). If either
of the Investors gives a Buy-Back Notice, then the other Investor will be
conclusively deemed to have given a Buy-Back Notice. At the election of Zions,
the Buy-Back Price may be paid in cash or Zions Common Stock or any combination
thereof. Zions agrees that if any part of the Buy-Back Price is paid in Zions
Common Stock, it will use its reasonable best efforts to register, at Zions'
sole expense and as soon as practicable after the Buy-Back Closing, such Zions
Common Stock pursuant to the Securities Act for resale by the Investors for a
period of one year
- 30 -
<PAGE>
after the effective date of the registration statement. None of the information
supplied by Zions for use in such registration statement, including any
prospectus contained therein, will contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
made therein, in light of the circumstances under which such statements were
made, not misleading. Furthermore, in connection with such registration Zions
shall use its reasonable best efforts (a) to list on the Nasdaq, or any other
U.S. stock exchange on which Zions Common Stock is listed, the Zions Common
Stock issued to the Investors, and (b) to register or qualify such stock under
the state "blue sky" or securities laws of such jurisdictions as the Investors
reasonably request and to keep such registrations and qualifications effective
for a period of at least one year.
(b) The closing of any purchase and sale of the Buy-Back Securities
pursuant to this Section 10.6 shall take place at such location and on such date
as shall be agreed in writing by the Investors and Zions (the "Buy-Back
Closing"); provided, however, that the Buy-Back Closing shall occur no later
than 60 days after the giving of the conclusive Bank Valuation (as defined
below). At the Buy-Back Closing, the Investors shall deliver to Zions the
certificates representing the Buy-Back Securities, registered in the name of the
Investors and duly endorsed in favor of Zions, and Zions shall, to the extent
the consideration is cash, make payment of the Buy-Back Price by wire transfer
of immediately available funds to an account or accounts designated by the
Investors and, to the extent the consideration is Zions Common Stock, deliver to
the Investors (i) certificates representing such Zions Common Stock (or
confirmation of book
- 31 -
<PAGE>
entry delivery of such Zions Common Stock) and (ii) an opinion of counsel for
Zions as to the due authorization, full payment and nonassessability of such
Zions Common Stock being issued. Zions recognizes that its obligations under
this Section 10.6 are unconditional.
(c) Within five days after delivery of the Buy-Back Notice, Zions and
the Investors (acting together) shall each hire an Investment Bank to provide a
valuation of all of the shares of Bank Common Stock (the "Bank Valuation") as of
the date of the Buy-Back Notice. For purposes of this Section 10.6(c), the Bank
Valuation shall be an amount equal to (but in no event less than US$1.00) the
aggregate value of all of the outstanding shares of Bank Common Stock (including
Bank Common Stock beneficially owned by Zions) as of the date of the Buy-Back
Notice based on the estimated aggregate U.S. dollar value of all shares of Bank
Common Stock on the assumption, at the option of the Investors, either (i) that
the Bank is being sold as an entirety by Zions or (ii) that the Bank Common
Stock is being traded on the Nasdaq as an independent going concern and not in
the context of a sale of the Bank. The Buy-Back Notice shall specify which of
such assumptions shall be applicable, which specification shall be irrevocable.
In making a determination regarding the foregoing, neither Investment Bank shall
be required or permitted to communicate with prospective purchasers of the Bank
but shall take into account the other factors it would consider if the Bank were
to be valued in accordance with the assumption specified. If the Investment
Banks are unable to agree on a single Bank Valuation within 30 days of the
commencement of their engagement (the
- 32 -
<PAGE>
"Engagement Period"), then (i) each Investment Bank shall furnish its own Bank
Valuation and (ii) Zions and the Investors shall choose a third Investment Bank
(the "Tie Breaker"), which shall be engaged to select as the conclusive Bank
Valuation either of the Bank Valuations proposed by the initial Investment Banks
but not a third bank valuation. If Zions and the Investors are unable to agree
on the selection of the Tie Breaker within 10 business days after the end of the
Engagement Period, then Zions shall recommend three Independent Investment Banks
to the Investors and the Investors shall select one of such Investment Banks
within five business days of such recommendation to act as the Tie Breaker to
provide the conclusive Bank Valuation. Within 20 business days after its
engagement, the Tie Breaker shall deliver to each Shareholder the final,
conclusive Bank Valuation. In making such Bank Valuation, the Tie Breaker shall
observe the valuation parameters set forth in the second and third sentences of
this Section 10.6 (c) and shall consult with, and listen to the views of, the
Investors and Zions and their respective Investment Banks. The fees and expenses
of the initial Investment Banks shall be paid by Zions or the Investors as the
case may be. If it is necessary to retain a Tie Breaker, then Zions shall pay
50% and the Investors shall pay 50% of the Tie Breaker's fees and expenses
incurred in connection with its providing the final, conclusive Bank Valuation.
(d) Each of the Shareholders agrees to provide the Tie-Breaker with
such indemnification and hold harmless provisions as the Tie-Breaker reasonably
requests.
- 33 -
<PAGE>
(e) For purposes of this Section 10.6, (i) the "Buy-Back Price" shall
consist of (A) the sum of the Investors' Proportionate Share of the Bank
Valuation with respect to the Bank Common Stock, minus (B) the amount of any
dividends declared and paid to the Investors from the date of the Buy-Back
Notice up to and including the date of the Buy-Back Closing and (ii) to the
extent any portion of the Buy-Back Price is paid in Zions Common Stock, it will
be conclusively deemed to have a value per share equal to the Average Price.
(f) If any Investor sells the Zions Common Stock received by it under
Section 10.6(a): (i) pursuant to a registration statement registering the sale
of such Zions Common Stock pursuant to Section 10.6(a), (ii) from time to time
during the period of 90 days following the effective date of such registration
statement and (iii) for an aggregate net sales price (after taking into account
sales commissions and discounts) (the "Sale Price") less than the Buy-Back
Price, Zions shall issue additional shares of Zions Common Stock to such
Investor in an aggregate amount, valued at the Sale Average Price (as defined
below), equal to the difference between the Buy-Back Price and the Sale Price.
"Sale Average Price" means the average of the closing prices of Zions Common
Stock, as reported on Nasdaq (as reported in The Wall Street Journal or, if not
reported therein, in another authoritative source), for the ten Nasdaq trading
days immediately preceding the delivery of a notice by any Investor, which
notice shall (i) be delivered to Zions during the 90 day period specified above
in this Section 10.6(f) and (ii) shall specify the number of shares of Zions
Common Stock sold and the Sale Price. Zions
- 34 -
<PAGE>
shall provide for the registration of such additional shares in the registration
statement pursuant to Section 10.6(a).
10.7 LEGENDS. All certificates for shares of the Bank Common Stock
shall bear a legend substantially in the form set forth below, and at the
Closing Zions shall exchange its share certificates of the Bank Common Stock for
one or more new certificates bearing such legend:
ANY SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER DISPOSITION OF THE SHARES
REPRESENTED BY THIS CERTIFICATE IS RESTRICTED BY, AND THE RIGHTS OF A
HOLDER OF SUCH SHARES ARE SUBJECT TO, THE TERMS AND CONDITIONS CONTAINED IN
A SHAREHOLDER AGREEMENT, DATED AS OF OCTOBER 1, 1998. THE BANK WILL NOT
TRANSFER ON ITS BOOKS ANY CERTIFICATES REPRESENTING SHARES NOR ISSUE ANY
CERTIFICATES IN LIEU THEREOF UNLESS ALL THE CONDITIONS FOR TRANSFER
CONTAINED IN SUCH SHAREHOLDER AGREEMENT HAVE BEEN COMPLIED WITH, AND A
PURPORTED TRANSFER NOT IN ACCORDANCE WITH THE TERMS THEREOF SHALL BE NULL
AND VOID AND OF NO EFFECT.
ARTICLE XI
TERMINATION
11.1 MUTUAL CONSENT. Prior to the Closing the parties may terminate
this Agreement at any time by mutual written agreement.
11.2 TERMINATION BY EITHER PARTY. Zions or the Investors may terminate
this Agreement, by notice to the other, if:
(a) Any application or notice for regulatory approval or exemption
filed with any regulatory agency or authority for the First Merger,
- 35 -
<PAGE>
the Second Merger or the acquisition of the Shares by the Investors is
denied or withdrawn.
(b) A court or other governmental authority of competent jurisdiction
shall have issued an order, writ, injunction or decree or shall have
taken any other action permanently restraining or otherwise
prohibiting the First Merger, the Second Merger or the acquisition of
Shares pursuant to this Agreement, and such order, writ, injunction,
decree or other action shall become final and non-appealable.
11.3 TERMINATION BY INVESTORS. The Investors may terminate this
Agreement if any condition set forth in Article V shall be incapable of being
satisfied.
11.4 TERMINATION BY ZIONS. Zions may terminate this Agreement if any
condition set forth in Article VI shall be incapable of being satisfied.
11.5 LIABILITY FOR TERMINATION. Termination of this Agreement shall not
relieve any party of any liability for any breach, default or non-performance
under this Agreement.
ARTICLE XII
MISCELLANEOUS
12.1 INTERPRETATION. The table of contents and headings contained in
this Agreement are for ease of reference only and shall not affect the meaning
or interpretation of this Agreement. Whenever the words "include", "includes",
or
- 36 -
<PAGE>
"including" are used in this Agreement, they shall be deemed followed by the
words "without limitation". Any singular term in this Agreement shall be deemed
to include the plural, and any plural term the singular.
12.2 WAIVER AND AMENDMENT. Any provision of this Agreement may be: (i)
waived in writing by the party benefitted by the provision; or (ii) amended or
modified at any time by an agreement in writing between all of the parties
hereto.
12.3 COUNTERPARTS. This Agreement may be executed in counterparts each
of which shall be deemed to constitute an original, but all of which together
shall constitute one and the same instrument.
12.4 GOVERNING LAW; JURISDICTION. (A) THIS AGREEMENT SHALL BE GOVERNED
BY, AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA
WITHOUT GIVING EFFECT TO CALIFORNIA CONFLICTS OF LAW PRINCIPLES AND, TO THE
EXTENT APPLICABLE, THE LAWS OF THE UNITED STATES.
(b) Except as otherwise expressly provided in this Agreement, any suit,
action or proceeding seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement or the transactions
contemplated hereby (a "Proceeding") shall only be brought in the United States
District Court for the Central District of California or any other state court
sitting in the City of Los Angeles, and each of the parties hereto hereby
consents to the jurisdiction of such courts and of the appropriate appellate
courts therefrom in any such Proceeding and irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to
- 37 -
<PAGE>
the laying of the venue of any such Proceeding in any such court or that any
such Proceeding which is brought in any such court has been brought in an
inconvenient forum and irrevocably agrees that a judgment in any such Proceeding
obtained in any such court may be enforced in the courts of any other
jurisdiction. Process in any such Proceeding may be served on any party anywhere
in the world, whether within or without the jurisdiction of any such court.
Without limiting the foregoing, each party hereto hereby agrees that service of
process on such party as provided in Section 12.7 shall be deemed effective
service of process on such party.
12.5 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO AND THE LIMITED
LIABILITY COMPANIES HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
12.6 EXPENSES. Except as set forth herein, each party hereto will bear
all expenses incurred by it in connection with this Agreement and the
transactions contemplated hereby.
12.7 NOTICES. All notices, requests, acknowledgments and other
communications hereunder to a party shall be in writing and shall be deemed to
have been duly given when delivered by hand, first-class mail, registered or
certified with return receipt requested, overnight carrier or telecopy (with
receipt confirmed by telephone) to such party at its address set forth below or
such other address as such party may specify by notice to the other party
hereto.
- 38 -
<PAGE>
If to Zions:
Zions Bancorporation
One South Main, Suite 1380
Salt Lake City, Utah 84111
Telecopy: (801) 524-2129
Attention: Chief Financial Officer
With a copy to:
Sullivan & Cromwell
1888 Century Park East
Los Angeles, California 90067-1725
Telecopy: (310) 712-8800
Attention: Stanley F. Farrar
If to either of the Investors:
Robert G. Sarver
Southwest Value Partners
4275 Greens Place
Wilson, Wyoming 83014
Telecopy: (619) 239-7999
With a copy to:
Hogan & Hartson L.L.P.
555 Thirteenth Street N.W.
Washington, D.C. 20004
Telecopy: (202) 637-5910
Attention: Dennis J. Lehr
12.8 ENTIRE AGREEMENT, ETC. This Agreement represents the entire
understanding of the parties hereto with respect to the matters contemplated
hereby and supersedes any and all other oral or written agreements heretofore
made. All terms and
- 39 -
<PAGE>
provisions of the Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns. Nothing in
this Agreement is intended to confer upon any other Person any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
12.9 ASSIGNMENT. This Agreement may not be assigned by any party hereto
without the prior written consent of the other parties.
12.10 TERMINATION. This Agreement shall terminate and cease to be in
effect at such time as the Investors no longer beneficially own any Bank Common
Stock.
12.11 SEVERABILITY. If one or more provisions of this Agreement are
determined to be unenforceable under applicable law, such provisions shall be
excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
- 40 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
ZIONS BANCORPORATION
By: /s/ Dale M. Gibbons
-----------------------------------
Name: Dale M. Gibbons
Title: Senior Vice President
and Chief Financial Officer
ROBERT G. SARVER SEPARATE
PROPERTY TRUST DATED
SEPTEMBER 29, 1997
By: /s/ Robert G. Sarver
-----------------------------------
Name:Robert G. Sarver, as Trustee
CBT Holdings,
a Wyoming General Partnership
By: CBT I LLC,
a Delaware Limited Liability
Company, as a General Partner
By: /s/ Robert G. Sarver
-----------------------------------
Name: Robert G. Sarver
Title: The Manager
By: CBT II LLC,
a Delaware Limited Liability
Company, as a General Partner
By: /s/ Robert G. Sarver
----------------------------------
Name: Robert G. Sarver
Title: The Manager
- 41 -
<PAGE>
EXHIBIT B TO SHAREHOLDER AGREEMENT
RESTATED
ARTICLES OF INCORPORATION
OF
CALIFORNIA BANK & TRUST
ONE: Name
The name of this corporation is:
CALIFORNIA BANK & TRUST
TWO: Purposes
The purpose of this corporation is to engage in commercial
banking business and the trust business, and any other lawful
activities which are not, by applicable laws or regulations,
prohibited to a commercial bank authorized to engage in trust
business.
THREE: Principal Office
The County of the State of California where the principal
office for the transaction of business of this corporation is
to be located is in the County of San Diego.
FOUR: Authorized Stock
This corporation is authorized to issue only one class of
shares of stock, consisting of 3,000,000 shares of common
stock with aggregate par value of $4,500,000; and the par
value of each of said shares of stock shall be One Dollar,
Fifty Cents, ($1.50). The common shares of the corporation
shall be subject to assessment by the board of directors upon
order of the Commissioner, Department of Financial
Institutions of the State of California for the purposes of
correcting an impairment of contributed capital in the manner
and to the extent provided for in Division I of the Financial
Code of the State of California.
FIVE: Exculpation of Directors
The liability of the directors of the corporation for monetary
damages shall be eliminated to the fullest extent permissible
under California law.
-1-
<PAGE>
SIX: Indemnification of Agents
The corporation is authorized to provide indemnification of
agents (as defined in Section 317 of the Corporations Code)
for breach of duty to the corporation and its stockholders
through bylaw provisions or through agreements with the
agents, or both, in excess of the indemnification otherwise
permitted by Section 317 of the Corporations Code, subject to
the limits on such excess indemnification set forth in
sections 204 of the Corporations Code.
-2-
<PAGE>
ARTICLES OF INCORPORATION
OF
NEW GROSSMONT BANK
ONE: Name
The name of this corporation is:
NEW GROSSMONT BANK
TWO: Purposes
The purpose of this corporation is to engage in commercial
banking business and any other lawful activities which are
not, by applicable laws or regulations, prohibited to a
commercial bank.
THREE: Principal Office
The County of the State of California where the principal
office for the transaction of business of this corporation is
to be located is the County of San Diego.
FOUR: Authorized Stock
This corporation is authorized to issue only one class of
shares of stock, consisting of 3,000,000 shares of common
stock with aggregate par value of $4,500,000; and the par
value of each of said shares of stock shall be One Dollar,
Fifty Cents, ($1.50). The common shares of the corporation
shall be subject to assessment by the board of directors upon
order of the Superintendent of Banks of the State of
California for the purposes of correcting an impairment of
contributed capital in the manner and to the extent provided
for in Division I of the Financial Code of the State of
California.
FIVE: Agent for Service of Process
The name and address in this state of the corporation's
initial agent for service of process in accordance with
subdivision (b) of Section 1502 of the General Corporation Law
is:
-1-
<PAGE>
Craig Engstrand, Esq.
Jennings, Engstrand & Henrikson
2255 Camino del Rio South
San Diego, California 92108
IN WITNESS WHEREOF, for the purpose of forming this corporation
under the laws of the State of California, the undersigned,
constituting the incorporators of this corporation, have executed
these Articles of Incorporation this 21st day of February, 1982.
/s/ Jorge del Corral
----------------------------------
Jorge del Corral
/s/ Carlos Tejeda
----------------------------------
Carlos Tejeda
-2-
<PAGE>
EXHIBIT D TO SHAREHOLDER AGREEMENT
List of Activities (Section 9.7)
Municipal Finance(both full faith and credit and revenue bonds) including
advisory services, underwriting, sales and trading activities relating
thereto
SBA lending and SBA secondary market activities, including purchase and sale of
Section 7A and Section 504 loans and participations
Origination of loans under Farmer Mac programs and capital markets activities
with respect to loans originated by Zions or third parties
Digital Signature Trust Company: acting as a certification authority and
providing other services of Digital Signature Trust Company relating to
electronic commerce
The purchase or sale of loans, deposits or securities from or to participants
in the capital markets and other corporate finance activities
The servicing and secondary marketing of mortgage loans
SARVER LOAN AGREEMENT
---------------------
This Loan Agreement is dated as of October 1, 1998 (the "Agreement") by
and between Robert G. Sarver, in his capacity as Trustee of the Robert G. Sarver
Separate Property Trust dated as of September 29, 1997 ("Sarver"), and Zions
Bancorporation ("Zions").
Recitals
--------
A. Sarver, Zions and a partnership that consists of two limited
liability companies as partners for both of which Sarver is the sole manager
have entered into a Shareholder Agreement dated as of October 1, 1998 (the
"Shareholder Agreement") with respect to an investment in Grossmont Bank, Zions'
California bank subsidiary.
B. Zions has agreed to provide non-recourse financing to Sarver in
connection with Sarver's individual investment.
NOW, THEREFORE, for good and valuable consideration, the receipt,
adequacy and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
<PAGE>
ARTICLE I
Definitions
-----------
Except as otherwise provided herein, the terms defined in the
Shareholder Agreement, including by reference to the Merger Agreement, shall
have their same respective meanings herein.
ARTICLE II
The Loan
--------
2.1 Making the Loan. At the Closing, subject to the terms and
conditions hereof, Zions shall loan (the "Loan") to Sarver $14,850,000. The Loan
shall be evidenced by a non-recourse note containing the terms and substantially
in the form of Exhibit A hereto (the "Note").
2.2 Interest. Interest on the Loan shall accrue at a rate equal to the
five-year U.S. Treasury note rate prevailing at the close of business on the
date two business days preceding the Closing (which rate shall be determined by
Zions by reference to The Wall Street Journal or other reliable source, which
determination shall be conclusive absent manifest error) plus 200 basis points,
shall compound annually on the anniversary of the Loan and shall be payable at
maturity or upon prepayment in accordance with Section 2.5 hereof.
-2-
<PAGE>
2.3 Maturity. The Loan will mature (the "Maturity Date") on March 31,
2003; provided, that if Zions has received a Buy-Back Notice on or before March
31, 2003, then the Maturity Date of a principal amount of the Loan equal to (i)
the amount of cash consideration received by Sarver pursuant to a purchase by
Zions of Buy-Back Securities shall be the date of such purchase and (ii) the net
proceeds (after taking into account any sales commissions or discounts) from the
sale of any Zions Common Stock received by Sarver pursuant to a purchase by
Zions of Buy-Back Securities shall be the date of such sale, together in each
case (i) and (ii) with accrued and unpaid interest on such principal amount to
such Maturity Date. Anything herein to the contrary notwithstanding, in no event
shall the Maturity Date be later than March 31, 2004, regardless of whether
Sarver has sold any or all of the Zions Common Stock received pursuant to a
purchase by Zions of Buy-Back Securities.
2.4 Collateral. As collateral for the Loan and all amounts payable
hereunder and under the Note, Sarver hereby grants to Zions a security interest
in and lien upon (a) 200,000 shares of Zions Common Stock (the "Zions Shares"),
(b) the Shares of the Interim Bank acquired by Sarver, (c) the Bank Common Stock
acquired by Sarver in the
-3-
<PAGE>
Second Merger upon cancellation of the Shares of the Interim Bank and (d) the
proceeds of each of the foregoing (collectively, the "Collateral").
2.5 Prepayment. Sarver may prepay the Loan in whole or in part at any
time, without premium or penalty but with accrued interest on the principal
amount being prepaid to the date of prepayment. Until the Loan is paid in full
Zions will continue to hold the Collateral.
2.6 Nonrecourse. Zions agrees to look only to the Collateral for
repayment of the Loan and the Note, and Sarver shall have no personal liability
therefor.
ARTICLE III
Conditions
3.1 The making of the Loan is subject to the conditions that Zions
shall have received the following, each in form and substance satisfactory to
it:
(a) the Note;
(b) a Security Agreement substantially in the form of Exhibit B hereto
(the "Security Agreement");
(c) certificates representing (i) the Zions Shares and (ii) Sarver's
Shares in the Interim Bank, each duly endorsed in blank or with duly
endorsed blank stock powers;
-4-
<PAGE>
(d) a Form FR G-3; and
(e) evidence that all conditions to the Closing pursuant to the
Shareholder Agreement have been, or will with the funding of the Loan, be
satisfied.
ARTICLE IV
Miscellaneous
-------------
4.1 Waiver and Amendment. Any provision of this Agreement may be: (i)
waived in writing by the party benefitted by the provision; or (ii) amended or
modified at any time by an agreement in writing between both parties hereto.
4.2 Counterparts. This Agreement may be executed in counterparts each
of which shall be deemed to constitute an original, but all of which together
shall constitute one and the same instrument.
4.3 Governing Law; Jurisdiction. (A) THIS AGREEMENT SHALL BE GOVERNED
BY, AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF UTAH WITHOUT
GIVING EFFECT TO UTAH CONFLICTS OF LAW PRINCIPLES.
(b) Except as otherwise expressly provided in this Agreement, any suit,
action or proceeding seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement or the transactions
-5-
<PAGE>
contemplated hereby (a "Proceeding") shall only be brought in the United States
District Court for the District of Utah or any other state court sitting in Salt
Lake City, and each of the parties hereto hereby consents to the jurisdiction of
such courts and of the appropriate appellate courts therefrom in any such
Proceeding and irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the venue of any
such Proceeding in any such court or that any such Proceeding which is brought
in any such court has been brought in an inconvenient forum and irrevocably
agrees that a judgment in any such Proceeding obtained in any such court may be
enforced in the courts of any other jurisdiction. Process in any such Proceeding
may be served on any party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, each party
hereto hereby agrees that service of process on such party as provided in
Section 4.6 shall be deemed effective service of process on such party.
4.4 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
-6-
<PAGE>
4.5 Expenses. Each party hereto will bear all expenses incurred by it
in connection with this Agreement and the transactions contemplated hereby.
4.6 Notices. All notices, requests, acknowledgments and other
communications hereunder to a party shall be in writing and shall be deemed to
have been duly given when delivered by hand, first-class mail, registered or
certified with return receipt requested, overnight carrier or telecopy (with
receipt confirmed by telephone) to such party at its address set forth below or
such other address as such party may specify by notice to the other party
hereto.
If to Zions:
Zions Bancorporation
One South Main, Suite 1380
Salt Lake City, Utah 84111
Telecopy: (801) 524-2129
Attention: Chief Financial Officer
If to Sarver:
Robert G. Sarver
Southwest Value Partners
4275 Greens Place
Wilson, Wyoming 83014
Telecopy: (619) 239-7999
4.7 Entire Agreement, Etc. This Agreement represents the entire
understanding of the parties hereto with respect to the Loan and the Collateral
therefor and
-7-
<PAGE>
supersedes any and all other oral or written agreements heretofore made. All
terms and provisions of the Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and assigns.
Nothing in this Agreement is intended to confer upon any other Person any rights
or remedies of any nature whatsoever under or by reason of this Agreement.
4.8 Assignment. This Agreement may not be assigned by any party hereto
without the prior written consent of the other party.
-8-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
ZIONS BANCORPORATION
By: /s/ Dale M.Gibbons
------------------------------------
Name: Dale M. Gibbons
Title: Senior Vice
President and Chief
Financial Officer
ROBERT G. SARVER SEPARATE
PROPERTY TRUST DATED AS OF
SEPTEMBER 29, 1997
By: /s/ Robert G. Sarver
------------------------------------
Name: Robert G. Sarver,
as Trustee
-9-
<PAGE>
EXHIBIT B
SECURITY AGREEMENT
None.
EMPLOYMENT AGREEMENT--ROBERT G. SARVER
--------------------------------------
AGREEMENT, dated as of October 1, 1998, by and between Grossmont Bank
("Grossmont") (the "Employer"), a subsidiary of Zions Bancorporation ("Zions"),
and Robert G. Sarver (the "Employee").
IN CONSIDERATION OF the mutual covenants herein contained, and other
good and valuable consideration, the parties hereto agree as follows:
1. EMPLOYMENT.
(a) Employer hereby agrees to employ Employee, and Employee agrees to
serve as an employee of Grossmont during the Period of Employment, as defined in
Section 2, in such capacity as is set forth herein and initially as President
and Chief Executive Officer of Grossmont with the duties and responsibilities as
shall be specified in the ByLaws of Grossmont.
(b) If at any time during the Period of Employment, the Employer fails,
without Employee's consent, to cause Employee to be elected or re-elected as
President and Chief Executive Officer of Grossmont, or removes Employee from
such offices, or if at any time during the Period of Employment, Employee shall
fail to be vested by the Board of Directors of Grossmont with the power and
authority of President and Chief Executive Officer of Grossmont or Employee
shall lose any significant duties or responsibilities attending such offices,
Employee shall have the right by written notice to Employer to terminate his
services hereunder, effective as of the last day of the third month after the
month of receipt by Employer of the written notice (or such earlier day as shall
be mutually agreed), in which event the Period of Employment, as hereinafter
defined, shall so terminate on the last day of such month; termination under
these circumstances shall be deemed pursuant to paragraph (a) of Section 6
hereof as a termination by Employer other than for "material breach" or "just
cause" with all the consequences which flow from such termination.
(c) If Zions proposes to be acquired in a merger or other business
combination, or Zions proposes to sell all of its shares of common stock in
Grossmont, both as
<PAGE>
permitted by Section 10.5 of the Shareholder Agreement, dated as of October 1,
1998, among Zions, Employee in his capacity as Trustee of the Robert G. Sarver
Separate Property Trust dated September 29, 1997 and the Partnership named
therein, Employee shall have the right by written notice to Employer to
terminate his services hereunder, effective as of the last day of the third
month after the month of receipt by Employer of the written notice (or such
earlier date as shall be mutually agreed), in which event the Period of
Employment, as hereinafter defined, shall so terminate on the last day of such
month; termination under these circumstances shall be deemed pursuant to
paragraph (a) of Section 6 hereof as termination by Employer other than for
"material breach" or "just cause" with all the consequences which flow from such
termination.
(d) If Employee exercises Employee's right of termination under either
paragraphs (b) or (c), Employee shall resign voluntarily as an employee of
Employer and any of its affiliates on the date Employee's termination of
employment becomes effective as provided for in the preceding paragraph.
2. PERIOD OF EMPLOYMENT.
The "Period of Employment" shall be the period commencing on the
Effective Time (as such term is defined in the Agreement and Plan of Merger,
dated as of March 25, 1998, by and among Zions, The Sumitomo Bank of California
and SBC Acquisition Corp., a merger vehicle subsidiary of Employer) and ending
on December 31, 2002.
3. DUTIES DURING THE PERIOD OF EMPLOYMENT.
Employee shall devote a majority of Employee's business time, attention
and best efforts to the affairs of Employer and the parent company and
subsidiaries of Employer during the Period of Employment, PROVIDED, HOWEVER,
that Employee may engage in other activities, such as activities involving
professional, charitable, educational, religious and similar types of
organizations, speaking engagements, membership on the board of directors of
other organizations (as Employer may from time to time agree to), and personal
investments and similar type activities to the extent that such other activities
do not inhibit or prohibit the performance of Employee's duties under this
Agreement or
-2-
<PAGE>
conflict in any material way with the business of Employer
and its subsidiaries.
4. CURRENT CASH COMPENSATION.
(a) BASE ANNUAL SALARY.
Employer will pay (or cause to be paid) to Employee during the Period
of Employment a base annual salary of $400,000 per annum, payable in monthly
installments during each fiscal year, or portion thereof, of the Period of
Employment. It is agreed between the parties that Employer shall review the base
annual salary as of January 1, 2000 and annually thereafter and in light of such
review may, in the discretion of the Board of Directors of Employer (but shall
not be obligated to), increase such base annual salary taking into account any
change in Employee's then responsibilities, increases in the cost of living
(including effective tax-rate increases), increases in compensation of other
executives of Employer and its subsidiaries, increases in salaries of executives
of other corporations, performance by Employee, and other pertinent factors.
(b) DISCRETIONARY BONUS.
During the Period of Employment, Employee shall be considered annually
by the Executive Compensation Committee of the Board of Directors of Zions for a
discretionary bonus payment by Grossmont made in accordance with the
compensation policies of Zions as presently in effect or as they may be modified
by Zions from time to time, taking into account the performance of Grossmont and
bonuses awarded to other individuals holding similar positions in Zions or in
subsidiaries of Zions.
5. OTHER EMPLOYEE BENEFITS.
(a) VACATION AND SICK LEAVE.
Employee shall be entitled to paid annual vacation periods and to sick
leave in accordance with the policies of Zions as in effect as of the date
hereof or as may be modified by Zions from time to time as may be applicable to
officers of Employee's rank employed by Zions or its subsidiaries.
-3-
<PAGE>
(b) VALUE-SHARING PLAN AND INCENTIVE STOCK PLAN.
Employee shall be entitled to receive units of participation under the
Value-Sharing Plan of Grossmont and stock options under the Incentive Stock
Option Plan of Zions, as each is in effect as of the date hereof or as may be
modified by Grossmont or Zions, as the case may be, from time to time, in such
amounts and upon such terms as may be prescribed by the Executive Compensation
Committee of the Board of Directors of Grossmont with respect to the
Value-Sharing Plan and the Executive Compensation Committee of the Board of
Directors of Zions with respect to the Incentive Stock Option Plan, in the sole
discretion of each Committee and, in the case of the Incentive Stock Option
Plan, as is comparable to options granted to other individuals holding similar
positions in Zions or in subsidiaries of Zions.
(c) EMPLOYEE BENEFIT PLANS OR ARRANGEMENTS.
Employee shall be entitled to participate in all employee benefit plans
of Zions, as presently in effect or as they may be modified by Zions from time
to time, under such terms as may be applicable to officers of Employee's rank
employed by Zions or its subsidiaries, including, without limitation, plans
providing retirement benefits, medical insurance, life insurance, disability
insurance, and accidental death or dismemberment insurance.
(d) EXPENSES.
Employee shall be reimbursed for reasonable travel and other expenses
incurred or paid by Employee in connection with the performance of his services
under this Agreement, upon presentation of expense statements or vouchers or
such other supporting information as may from time to time be requested, in
accordance with such policies of Zions as are in effect as of the date hereof
and as may be modified by Zions from time to time, under such terms as may be
applicable to officers of Employee's rank employed by Zions or its subsidiaries.
6. TERMINATION.
(a) TERMINATION BY EMPLOYER OTHER THAN FOR
MATERIAL BREACH OR JUST CAUSE.
-4-
<PAGE>
If Employer should terminate the Period of Employment for other than
material breach or just cause, as herein defined, or if Employee should
terminate the Period of Employment pursuant to paragraphs (b) or (c) of Section
1, in addition to all other benefits, if any, payable as provided for hereunder,
Employer shall forthwith cause to be paid to Employee an amount equal to the sum
of (a) the result of multiplying (i) the base annual salary payable to Employee
pursuant to paragraph (a) of Section 4 as of the date of termination of the
Period of Employment by (ii) the number of years (and fractions thereof) then
remaining in the Period of Employment and (b) the result of multiplying (i) the
average of the bonuses payable to Employee pursuant to paragraph (b) of Section
4 or otherwise during the three fiscal years immediately preceding the date of
termination of the Period of Employment by (ii) the number of years (and
fractions thereof) then remaining in the Period of Employment.
"Material breach" and "just cause" shall mean the continual failure by
Employee to perform substantially his duties with Employer (other than any such
failure resulting from incapacity due to physical or mental illness) after a
demand for substantial performance is delivered to Employee by the Secretary of
the Board of Directors of Employer or the Chief Executive Officer of Zions;
conviction of a felony; habitual drunkenness; excessive absenteeism not related
to illness, sick leave or vacations, but only after notice from the Board of
Directors followed by a repetition of such excessive absenteeism; dishonesty; or
continuous conflicts of interest after notice in writing from the Board of
Directors. Notwithstanding the foregoing, Employee shall not be deemed to have
been terminated for material breach or just cause unless and until there shall
have been delivered to him a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the entire incumbent membership
of the Board of Directors of Employer at a meeting of the Board of Directors
called and held (after reasonable notice to Employee and an opportunity for
Employee, together with Employee's counsel, to be heard before the Board of
Directors) for the purpose of determining whether in the good faith opinion of
the Board of Directors Employer has just cause to terminate Employee's
employment.
-5-
<PAGE>
(b) TERMINATION BY EMPLOYER FOR MATERIAL BREACH OR JUST CAUSE.
If Employer should terminate the Period of Employment for material
breach or just cause, as herein defined, Employee will be entitled to be paid
the base annual salary otherwise payable to Employee under paragraph (a) of
Section 4 through the end of the month in which the Period of Employment is
terminated.
(c) TERMINATION BY EMPLOYEE OTHER THAN PURSUANT TO EMPLOYEE'S RIGHT
OF TERMINATION PURSUANT TO SECTIONS 1(B) OR (C) HEREOF.
If Employee should terminate the Period of Employment other than
pursuant to Sections 1(b) or (c), Employee will be entitled to be paid the base
annual salary otherwise payable to Employee under paragraph (a) of Section 4 to
the end of the month in which the Period of Employment is terminated.
If upon 90 days' written notice to Employer Employee should terminate
the Period of Employment other than pursuant to Employee's right of termination
pursuant to Sections 1(b) or (c) hereof, then from the date of termination until
the earlier of the second anniversary of the date of termination or the end of
the Non-Competition Period (as defined herein), Employee will be entitled to be
paid $50,000 on an annual basis payable in monthly installments during each
fiscal year, or portion thereof, in such time period.
7. NON-DISCLOSURE.
Employee shall not, at any time during or following the Period of
Employment, disclose, use, transfer or sell, except in the course of employment
with Employer, any confidential information or proprietary data of Employer and
its subsidiaries so long as such information or proprietary data remains
confidential and has not been disclosed or is not otherwise in the public
domain, except as required by law or pursuant to legal process.
8. NONCOMPETITION AGREEMENT.
(a) Employee hereby agrees that from the Effective Date until (i) the
fifth anniversary of the
-6-
<PAGE>
Effective Date or (ii) in the event that the Period of Employment is terminated
pursuant to Section 6 hereof the earlier of the fifth anniversary of the
Effective Date or the second anniversary of the date of such termination (the
"Non-Competition Period"), Employee will not (i) engage in the banking business
other than on behalf of Employer or its affiliates within the Designated Area
(as hereinafter defined), (ii) directly or indirectly own, manage, operate,
control, be employed by, or provide management or consulting services in any
capacity to any firm, corporation, or other entity (other than Employer or its
affiliates) engaged in the banking business in the Designated Area, or (iii)
directly or indirectly solicit or otherwise intentionally cause any employee,
officer, or member of the respective Boards of Directors of Employer or Zions or
any of their affiliates to engage in any action prohibited under (i) or (ii) of
this Section 8(a); provided that the ownership by Employee as an investor of not
more than five percent of the outstanding shares of stock of any corporation
whose stock is listed for trading on any securities exchange or is quoted on The
Nasdaq Stock Market, or the shares of any investment company as defined in
section 3 of the Investment Company Act of 1940, as amended, shall not in itself
constitute a violation of Employee's obligations under this Section 8(a).
(b) Employee acknowledges and agrees that irreparable injury will
result to Employer and Zions in the event of a breach of any of the provisions
of this Section 8 (the "Designated Provisions") and that Employer and Zions will
have no adequate remedy at law with respect thereto. Accordingly, in the event
of a material breach of any Designated Provision, and in addition to any other
legal or equitable remedy Employer or Zions may have, Employer and Zions shall
be entitled to the entry of a preliminary and permanent injunction (including,
without limitation, specific performance) by a court of competent jurisdiction
in San Diego, California, to restrain the violation or breach thereof by
Employee or any affiliates, agents, or any other persons acting for or with
Employee in any capacity whatsoever, and Employee submits to the jurisdiction of
such court in any such action.
(c) It is the desire and intent of the parties that the provisions of
this Section 8 shall be enforced to the fullest extent permissible under the
laws and public policies applied in each jurisdiction in which enforcement
-7-
<PAGE>
is sought. Accordingly, if any particular provision of this Section 8 shall be
adjudicated to be invalid or unenforceable, such provision shall be deemed
amended to delete therefrom the portion thus adjudicated to be invalid or
unenforceable, such deletion to apply only with respect to the operation of such
provision in the particular jurisdiction in which such adjudication is made. In
addition, should any court determine that the provisions of this Section 8 shall
be unenforceable with respect to scope, duration, or geographic area, such court
shall be empowered to substitute, to the extent enforceable, provisions similar
hereto or other provisions so as to provide to Employer and Zions, to the
fullest extent permitted by applicable law, the benefits intended by this
Section 8.
(d) As used herein, "Designated Area" shall mean each of the counties
in the State of California.
9. LIFE INSURANCE.
In light of the unusual abilities and experience of Employee, Employer
and Zions in their discretion may apply for and procure as owner and for its own
benefit insurance on the life of Employee, in such amount in such form as
Employer and Zions may choose. Employer or Zions shall make all payments for
such insurance and shall receive all benefits from it. Employee shall have no
interest whatsoever in any such policy or policies but, at the request of
Employer or Zions shall submit to medical examinations and supply such
information and execute such documents as may reasonably be required by the
insurance company or companies to which Employer or Zions has applied for
insurance.
10. REPRESENTATIONS AND WARRANTIES.
(a) Employee represents and warrants to Employer that his execution,
delivery, and performance of this Agreement will not result in or constitute a
breach of or conflict with any term, covenant, condition, or provision of any
commitment, contract, or other agreement or instrument, including, without
limitation, any other employment agreement, to which Employee is or has been a
party.
(b) Employee shall indemnify, defend, and hold harmless Employer and
Zions for, from and against any and all losses, claims, suits, damages,
expenses, or
-8-
<PAGE>
liabilities, including court costs and counsel fees, which Employer or Zions has
incurred or to which Employer or Zions may become subject, insofar as such
losses, claims, suits, damages, expenses, liabilities, costs, or fees arise out
of or are based upon any failure of any representation or warranty of Employee
in section 10(a) hereof to be true and correct when made.
11. INDEMNIFICATION. At all times during the Period of Employment,
Employer's Articles of Incorporation and Bylaws shall provide for the
indemnification of Employee against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative,
relating to Employee's actions as a director and/or officer of Employer, and to
the advancement of expenses as incurred in connection therewith, to the fullest
extent permissible under California law and the Federal Deposit Insurance Act.
To the extent commercially available at a cost appropriate for the anticipated
benefits, either Zions or Employer shall maintain in effect policies of
directors' and officers' liability insurance comparable to the policies
maintained by GB Bancorporation, the former owner of all the outstanding voting
common stock of the Employer, prior to the acquisition of GB Bancorporation by
Zions, at all times during the Period of Employment.
12. GOVERNING LAW.
(a) This Agreement is governed by and is to be construed and enforced
in accordance with the laws of the State of California. If under such law, any
portion of this Agreement is at any time deemed to be in conflict with any
applicable statute, rule, regulation or ordinance, such portion shall be deemed
to be modified or altered to conform thereto or, if that is not possible, to be
omitted from this Agreement; the invalidity of any such portion shall not affect
the force, effect and validity of the remaining portion hereof.
(b) Subject to the right of each party to seek specific performance
(which right shall not be subject to arbitration), if a dispute arises out of or
related to this Agreement, or the breach thereof, such dispute shall be
-9-
<PAGE>
referred to arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association ("AAA"). A dispute subject to the
provisions of this section will exist if either party notifies the other party
in writing that a dispute subject to arbitration exists and states, with
reasonable specificity, the issue subject to arbitration (the "Arbitration
Notice"). The parties agree that, after the issuance of the Arbitration Notice,
the parties will try in good faith to resolve the dispute by mediation in
accordance with the Commercial Rules of Arbitration of AAA between the date of
the issuance of the Arbitration Notice and the date the dispute is set for
arbitration. If the dispute is not settled by the date set for arbitration, then
any controversy or claim arising out of this Agreement or the breach hereof
shall be resolved by binding arbitration and judgment upon any award rendered by
arbitrator(s) may be entered in a court having jurisdiction. Any person serving
as a mediator or arbitrator must have at least ten years' experience in
resolving commercial disputes through arbitration. In the event any claim or
dispute involves an amount in excess of $100,000, either party may request that
the matter be heard by a panel of three arbitrators; otherwise all matters
subject to arbitration shall be heard and resolved by a single arbitrator. The
arbitrator shall have the same power to compel the attendance of witnesses and
to order the production of documents or other materials and to enforce discovery
as could be exercised by a United States District Court judge sitting in San
Diego, California. In the event of any arbitration, each party shall have a
reasonable right to conduct discovery to the same extent permitted by the
Federal Rules of Civil Procedure, provided that such discovery shall be
concluded within ninety days after the date the matter is set for arbitration.
Any provision in this Agreement to the contrary notwithstanding, this section
shall be governed by the Federal Arbitration Act and the parties have entered
into this Agreement pursuant to such Act.
13. NOTICES.
All notices under this Agreement shall be in writing and shall be
deemed effective when delivered in person, or forty-eight (48) hours after
deposit thereof in the U.S. mails, postage prepaid, for delivery as registered
or certified mail, addressed, in the case of:
-10-
<PAGE>
(a) Employee, to:
Robert G. Sarver
Southwest Value Partners
4275 Greens Place
Wilson, Wyoming 83014
Telecopy: (619) 239-7999
(b) Employer, to:
Grossmont Bank
4320 La Jolla Village Drive, Suite 270
San Diego, California 92122
Attention: Jeffrey W. Hill
Telecopy: (619) 552-0463
In lieu of personal notice or notice by deposit in the U.S. mail, a
party may give notice by confirmed fax (with telephone confirmation of receipt).
14. MISCELLANEOUS.
(a) ENTIRE AGREEMENT.
This Agreement constitutes the entire understanding between Employer
and Employee relating to employment of Employee by Employer and supersedes and
cancels all prior written and oral agreements and understandings with respect to
the subject matter of this Agreement. This Agreement may be amended but only by
a subsequent written agreement of the parties. This Agreement shall be binding
upon and shall inure to the benefit of Employee, Employee's heirs, executors,
administrators and beneficiaries, and Employer and its successors.
(b) WITHHOLDING TAXES.
All amounts payable to Employee under this Agreement shall be subject
to applicable withholding of income, wage and other taxes.
-11-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the year and day first above written.
GROSSMONT BANK
By: /s/ Allan W. Severson
-----------------------------------
Name: Allan W. Severson
Title: President
/s/ Robert G. Sarver
-----------------------------------
Robert G. Sarver
Agreed as to the obligations
of Zions Bancorporation
hereinabove
By: /s/ Dale M. Gibbons
------------------------------
Name: Dale M. Gibbons
Title: Senior Vice President
and Chief Financial Officer
-12-
NON-RECOURSE PROMISSORY NOTE
U.S. $14,850,000 Dated: October 1, 1998
FOR VALUE RECEIVED, the undersigned, Robert G. Sarver Separate Property
Trust dated as of September 29, 1997 ("Sarver"), HEREBY PROMISES TO PAY to the
order of Zions Bancorporation ("Zions"), One South Main, Suite 1380, Salt Lake
City, Utah, on the Maturity Date (as such term is defined in the Loan Agreement
dated as of October 1, 1998 (the "Agreement") between Sarver and Zions), the
principal sum of Fourteen Million Eight Hundred Fifty Thousand U.S. dollars
(U.S. $14,850,000) (the "Loan"), or such lesser principal amount as is then due
on such Maturity Date, together with interest on the unpaid principal amount of
the Loan from the date hereof until such principal amount is paid in full, at
the rate of 6.39%, compounded annually. Interest shall be calculated on the
basis of the actual number of days involved and a year of 365 or 366 days, as
the case may be, and shall be payable on the Maturity Date or upon prepayment as
provided in the Agreement.
Both principal and interest are payable to Zions in lawful money of the
United States of America in immediately available funds.
This Promissory Note is (i) the Note referred to in the Agreement, (ii)
secured by the Collateral as defined in the Agreement and subject to the
Security Agreement (as defined therein) and (iii) without recourse to Sarver.
Reference is made to the Agreement with respect to the prepayment hereof.
This Promissory Note shall be governed by, and construed in accordance
with, the internal laws of the State of Utah.
Robert G. Sarver Separate Property Trust
dated as of September 29, 1997
By: /s/ Robert G. Sarver
-------------------------------------
Name: Robert G. Sarver, as Trustee
ZIONS BANCORPORATION
PRESS RELEASE
***FOR IMMEDIATE RELEASE***
FOR: ZIONS BANCORPORATION ZIONS BANCORPORATION
One South Main, Suite 1380 Contact: Dale Gibbons
Salt Lake City, Utah One South Main, Suite 1380
Harris H. Simmons Salt Lake City, Utah 84111
President/Chief Executive Officer Tel: (801) 524-4787
FOR: SUMITOMO BANK OF CALIFORNIA SUMITOMO BANK OF CALIFORNIA
320 California Street Contact: Kyle Tatsumoto
San Francisco, California 94104 320 California Street
Robert Sarver San Francisco, California 94104
Chairman/Chief Executive Officer Tel: 415-445-8167
October 1, 1998
ZIONS BANCORPORATION COMPLETES ACQUISITION
OF THE SUMITOMO BANK OF CALIFORNIA
SALT LAKE CITY and SAN FRANCISCO, October 1, 1998 - Zions Bancorporation
("Zions") (Nasdaq: ZION) has completed its acquisition of The Sumitomo Bank of
California ("Sumitomo") (Nasdaq: SUMI). Zions and Sumitomo signed a definitive
agreement to merge on March 25. Sumitomo has been merged into Grossmont Bank
("Grossmont"), which has been renamed California Bank and Trust ("CBT"). With
assets of $6 billion, CBT is the fifth largest commercial bank in the state.
Signage on the Sumitomo branches will be changed in the next 30 days, however,
Grossmont will continue to operate under its present name until February 1999,
when the operating systems will be converted.
Commenting on the merger, Harris Simmons, president and chief executive officer
of Zions said, "We are excited to be building a new state-wide banking presence
in California through our merger with Sumitomo.
<PAGE>
ZIONS BANK AND SUMITOMO
During the six months since we announced this acquisition, we have been
impressed by the strength and stability of the bank's core deposit franchise and
the enduring quality of its loan portfolio. The creation of California Bank and
Trust from the merger of Sumitomo and Grossmont provides a new financial
services alternative for individuals and businesses in the state - a bank with
an expanded menu of products, committed to providing superior services to its
customers."
Robert Sarver, chairman and chief executive officer of CBT said, "California
Bank and Trust will have strong regional management with close ties to the
communities in which we operate. We are well on our way to putting decision
makers and relationship managers closer to the customer. We are very excited to
have completed the merger and our employees are working very hard to ensure a
smooth transition for existing customers and to structure CBT to deliver the
products and services of a larger bank in a local way."
Under local management teams and community identities, Zions Bancorporation
operates full-service banking offices in Arizona, California, Colorado, Idaho,
Nevada, New Mexico, Utah and Washington. It also offers a comprehensive array of
investment, mortgage, insurance, and electronic commerce services and is a
leader in providing innovative financing solutions for small businesses
nationwide. Investor information can be accessed via the Internet at
http://www.zionsbank.com. Information about California Bank and Trust is
available at http://www.calbanktrust.com. Zions Bancorporation's common shares
are traded on The Nasdaq Stock Market under the symbol "ZION."
FORWARD-LOOKING INFORMATION
This news release contains statements regarding the projected performance of
Zions and its operations. These statements constitute forward-looking
information within the meaning of the Private Securities Litigation
<PAGE>
ZIONS BANK AND SUMITOMO
Reform Act. Actual results or achievements may differ materially from the
projections provided in this release since such projections involve significant
known and unknown risks and uncertainties. Factors that might cause such
differences include, but are not limited to, the timing of closing proposed
acquisitions and new operations being delayed or such acquisitions or activities
being prohibited, competitive pressures among financial institutions increasing
significantly, economic conditions, either nationally or locally in areas in
which Zions conducts its operations, being less favorable than expected,
legislation or regulatory changes which adversely affect the ability of the
Company to conduct, or the accounting for, business combinations and new
operations. Zions disclaims any obligation to update any such factors or to
publicly announce the result of any revisions to any of the forward-looking
statements included herein to reflect future events or developments.
###
